HDFC BANK RAISES $1 BN FROM OFFSHORE BONDS

MUMBAI: HDFC Bank Ltd raised $1 billion by selling AT1 bonds to overseas investors, the biggest such sale by an Indian lender, to strengthen its balance sheet amid a rebound in credit growth after the pandemic’s second wave ebbed, two people aware of the development said.

“The bonds offering received strong demand from investors across markets, and the overall demand was $4.5 billion. The final pricing of the bond is 3.7%, as against the initial price guideline of 4.125%,” one of the two people cited above said. Bank of America, Barclays, BNP Paribas, and a few other foreign banks advised India’s largest private lender on the bonds sale.

The robust response to the sale indicates overseas investors have ignored concerns about the AT1 bonds that arose after the Reserve Bank of India extinguished ₹8,415 crore worth of such securities after it seized Yes Bank Ltd as part of a bailout, causing losses to investors.

“Major investors that participated in the bond offering include Singapore’s state investor GIC and American institutional investors Blackrock and Fidelity,” the person added.

Other investors that were part of the bond offering road shows included AIG, T Rowe Price, Schroder and Investment Corp. of Dubai, according to stock exchange filings by the bank.

The widespread losses to individual investors who invested in Yes Bank’s AT1 bonds prompted the Securities and Exchange Board of India to introduce stricter investment rules for local sales of such instruments, leading to a drying out of such sales. HDFC Bank’s success may encourage rivals to look at similar offerings in the overseas market, the people cited above said.